Great Neck, New York, May 26, 2009 -- BRT Realty Trust (NYSE:BRT) today announced that it has restructured its outstanding issues of trust preferred securities aggregating $55,000,000. BRT has exchanged its $55,000,000 of outstanding trust preferred securities for $58,300,000 of newly issued subordinated notes, representing 106% of the original face amount of the outstanding trust preferred securities. The new notes bear a fixed interest rate of 3.5% per annum for the period commencing May 1, 2009 and ending July 31, 2012 (the “Modification Period”). Subsequent to July 31, 2012, the interest rate will revert back to the original blended interest rate of 8.37% in effect prior to the exchange and commencing April 30, 2016 the blended interest rate will be a floating rate of 2.95% above LIBOR. During the Modification Period, BRT is to pay interest annually in advance. In connection with the exchange transaction, BRT was required to pay or reimburse the holders of the trust preferred securities and their agents and representatives for all costs incurred in connection with the issuance of the replacement securities, including, among other costs, (a) outside legal counsel fees (b) financial advisory and/or due diligence fees and (c) transaction fees.
The terms of the new subordinated notes provide that during the Modification Period, and as long as BRT remains a real estate investment trust, BRT will be permitted to make distributions to its shareholders provided that (i) during tax years 2008 and 2009 such distributions are paid in the form of BRT’s common shares to the maximum extent permissible under existing Internal Revenue Service regulations with the balance payable in cash and (ii) thereafter to satisfy REIT requirements or pay capital gains, if any, provided such distributions are paid in the form of BRT’s common shares to the maximum extent permissible under the IRS regulations in effect at the time of such distributions, with the balance payable in cash. BRT is currently evaluating the effect of this transaction on its financial statements.
The new notes will not be and have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or any applicable exemption from registration requirements.
BRT is a New York-based Real Estate Investment Trust that specializes in the origination and holding for investment of senior and junior commercial mortgage loans secured by real property in the United States. For more information on BRT, please visit our Home Page.
Caution Concerning Forward-Looking Statements: Materials included in this filing may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Statements that include the words "may," "will," "would," "could," "should," "believes," "estimates," "projects," "potential," "expects," "plans," "anticipates," "intends," "continues," "forecast," "designed," "goal," or the negative of those words or other comparable words should be considered uncertain and forward-looking.
Contact: Simeon Brinberg, Senior Vice President - (516) 466-3100
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